WOOD Flash – Turkey macro: CBT surprises with a bold move
Yesterday (24 August), the Monetary Council hiked the policy rate by 750bps, to 25%, substantially bolder than the 250bps both we and the consensus were expecting. The statement presented this as a catch-up move, which we see as aimed at mitigating the risk of another inflationary spiral, after the CBT began to phase out the FX-deposit scheme (KKM). Hence, we see it as a front-loaded move, to accelerate the policy normalisation process that has been unfolding since June, to slow the economy down, but not excessively so, given the local elections expected in March next year. Looking ahead, we reiterate our forecast of a 30% terminal rate at the end of 2023E and 2024E, but flag a further 5ppts of upside, to 35% for this year, to support a smooth deposits transition. The higher rate would imply up to 0.5ppts of downside risk for our real GDP forecast of 3.2% for next year.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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